Ofgem and the Department for Business, Energy and Industrial Strategy (BEIS) have published an open letter announcing the next steps in their joint review of the offshore transmission regime.
According to the document, the review will be split into three main workstreams covering “early opportunities”, the “pathway to 2030” and the “enduring regime”, as well as a fourth cross-cutting workstream on multi-purpose interconnectors.
The first of the four will look at projects that are already at relatively advanced stages of development and consider whether there are “flexibilities and minor changes to regulations that could allow them to take a more coordinated approach under the current regime.” These could include an alternative approach to anticipatory investments or specific amendments to regulations. Ofgem said it will seek to consult on possible changes during 2021.
The second workstream will focus on projects scheduled for connection in the late 2020s and early 2030s, with the aim of ensuring that transmission constraints do not pose a barrier to achieving the government’s target of installing 40GW of offshore wind capacity by the end of the decade.
The letter said this strand will seek to increase “central coordination”, including between onshore and offshore transmission, and accelerate the delivery of the required infrastructure: “It will consider how to give the onshore transmission owners and Ofgem the certainty they require to make anticipatory investments onshore along with a more centralised approach to delivery of offshore transmission.”
The third workstream will develop a new policy framework for projects currently beginning the development process, such as those applying to the Crown Estate’s fourth leasing round for seabed rights or the Crown Estate Scotland’s Scotwind leasing round.
“This is likely to require changes to primary legislation and implementing legislation and changes to regulations and industry codes,” the letter added. “We are in the process of developing high-level design options and intend to consult on proposals in 2021.”
Meanwhile, the fourth and final workstream will seek to ensure that the changes made as part of the others are compatible with multi-purpose interconnectors (MPIs) and identify and develop specific legislative and regulatory changes to enable their construction: “This will involve both tactical changes to facilitate the delivery of early opportunity MPI projects from 2027 onwards, as well as developing an enduring regime for effective delivery of projects further in the future.”
The correspondence also summarised the responses to a previous open letter issued in August that invited stakeholders to share their thoughts on the review.
Among the issues highlighted by the respondents were the relationship between the Contracts for Difference (CfD) scheme and the cap and floor funding regime for interconnectors, the recovery of anticipatory investment through network charges and the alignment of CfD auctions with the consenting process.